Putting cash into PIEs
While many other asset classes have development PIE compliant funds to take advantage of the new rules which came into play on October 1, it has taken until this week for the first tax-efficient cash fund to be launched.
Tuesday, December 4th 2007, 8:37AM
Under PIE rules investors with money on funds are taxed at their marginal tax rate, not the fund rate. The PIE rules are particularly useful for those on 39c tax rates.
RaboPlus general manager Mike Heath says a person on a 39% marginal tax rate who invests $100,000 at 8% in a PIE, would earn $720 more a year than a conventional cash investment, simply through paying less tax.
"The Cash Advantage Fund is perfect for investors who are looking for competitive returns from a cash deposit investment. Our Fund doesn't carry any fees, which is important because there is no point moving your money to a PIE if the fees erode the tax gain."
AMP Capital Investors'Head of Sales and Marketing, Anthony Edmonds, said that people who liked the safety of having their money in bank deposits would find the Cash Advantage Fund a very attractive alternative.
"We call it the 'eat well/sleep well' rule. We are providing a cash investment which behaves like a bank deposit, and with the added advantage of the yield being enhanced by the tax benefits relating to PIEs."
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